United States District Court, D. New Jersey
JOSEPH SORANNO, individually and on behalf of all others similarly situated Plaintiffs,
HEARTLAND PAYMENT SYSTEMS, LLC, successor in interest to HEARTLAND PAYMENT SYSTEMS, INC., Defendant.
Freda L. Wolfson Chief United States District Judge.
Joseph Soranno (“Soranno”), filed suit
individually and on behalf of putative class members, against
defendant, Heartland Payment Systems, LLC
(“Heartland”), for breach of contract (Count
One), breach of the implied covenant of good faith and fair
dealing (Count Two), and unjust enrichment (Count Three).
Soranno, a former Heartland employee, brought suit against
Heartland over certain commissions Soranno alleges were not
paid. In the instant matter, Heartland moves to dismiss the
claim for the breach of the implied covenant of good faith
and fair dealing. Because Soranno does not sufficiently
allege that claim, Heartland's motion to dismiss Count
Two is GRANTED.
following facts are taken from the Complaint and taken as
true for the purposes of this motion. Heartland is in the
business of providing processing services to merchants for
payment card transactions. Complaint. (“Compl.”),
at ¶ 1. Heartland hired Soranno in January 2007 as a
Relationship Manager, a commission-only sales position.
Id. at ¶ 2, 32. Soranno sold Heartland's
processing services for American Express (“Amex”)
card payment transactions to merchants, and for doing so,
earned recurring monthly commissions. Id. at ¶
4. All commission-based positions at Heartland are eligible
to attain “Vested” status, which permits
employees to continue earning commissions even after their
employment with Heartland ends. Id. at ¶ 34.
February or March of 2008, Soranno allegedly achieved Vested
status, and he executed Heartland's Vested Relationship
Manager Agreement. Id. at ¶ 36. According to
Soranno, in April 2008, he took a new position as a Territory
Manager, which required him to execute Heartland's
Territory Manager Agreement. Id. at ¶ 38. Both
executed agreements (hereinafter “VA”) are
interchangeable. Id. at ¶ 45. Soranno alleges
that the VA entitled him to receive commissions for his
merchants' transactions processed through Heartland after
his employment at Heartland ended. Id. at
¶¶ 6, 34. However, the VA also provided that
Sorannos's commissions would be paid consistent with
Heartland's Sales Policy Manual and that the manual could
be amended periodically. Id. at ¶ 7.
voluntarily resigned from his position with Heartland in
December 2012, and he continued to receive his commissions
under the VA in accordance with the Sales Policy Manual.
Id. at ¶¶ 49, 50. In 2014, Soranno avers
that Amex changed its pricing for card transactions and
Heartland converted merchants to the new pricing.
Id. at ¶ 51. In 2015, Heartland allegedly
revised its Sale Policy Manual to reflect a new commission
structure for Amex processing services under the new pricing.
Id. at ¶¶ 60-61. As a result, Soranno
acknowledges that he experienced an increase in the value of
his commissions for December 2014 and January 2015, which
Soranno maintained was an indication that Heartland was
receiving more revenue from merchants under the new pricing.
Id. at ¶ 63.
the price conversion, Soranno was subject to a restrictive
covenant in the VA prohibiting Soranno from soliciting any of
Heartland's merchants. Id. at ¶ 52. Then,
in February 2015, Soranno alleges that Heartland ceased
commission payments to him and class members, without
warning, notice, or explanation, in violation of the VA.
Id. at ¶¶ 65, 96. However, Soranno alleges
that Heartland continued to pay commissions to its
then-active sales employees who were subject to the same
sales policies. Id. at ¶¶ 67, 68.
asserts that, in bad faith and with improper motive,
Heartland failed to give warning or notice to Soranno that
Heartland would discontinue commissions. Id. at
¶ 74. Heartland, according to the Complaint, did not
communicate the Amex price change and amendments made to the
sales policies, and concealed the reasons for terminating the
commissions. Id. at ¶¶ 76, 133.
Soranno claims that Heartland demonstrated improper motive
through its disparate treatment of former and active
employees because it continued to pay commissions on
identically price-converted merchant accounts to its active
sales employees, who were governed by the same Sales Policy
Manual. Id. at ¶¶ 78, 137. Soranno also
alleges that Heartland stopped paying the commissions because
it was facing competition from other payment processing
companies, and that Heartland's founder and former CEO,
Robert O. Carr, labeled the new pricing program as a new
product altogether in order to render subsequent transactions
ineligible for commission payments post-employment.
Id. at ¶¶79, 86. In addition, Soranno
claims that Heartland's executive managers, who were also
shareholders, were attempting to sell or merge Heartland, and
therefore, had a financial incentive to reduce commissions to
make Heartland a better candidate for a merger or
acquisition. Id. at ¶¶ 81-82.
October 15, 2018, Soranno brought this putative class action
against Heartland for breach of contract (Count One), breach
of the implied covenant of good faith and fair dealing (Count
Two), and unjust enrichment (Count Three). Heartland moves to
dismiss Count Two (breach of the duty of good faith and fair
dealing) under Rule 12(b)(6).
Standard of Review
Fed.R.Civ.P. 12(b)(6), a complaint may be dismissed for
“[f]ailure to state a claim upon which relief can be
granted.” Fed.R.Civ.P. 12(b)(6). When reviewing a
motion to dismiss on the pleadings, courts “accept all
factual allegations as true, construe the complaint in the
light most favorable to the plaintiff, and determine whether,
under any reasonable reading of the complaint, the plaintiff
may be entitled to relief.” Phillips v. Cnty. of
Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (quotations
omitted). Under this standard, the factual allegations set
forth in a complaint “must be enough to raise a right
to relief above the speculative level.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
Indeed, “the tenet that a court must accept as true all
of the allegations contained in a complaint is inapplicable
to legal conclusions.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). “[A] complaint must do more than
allege the plaintiff's entitlement to relief. A complaint
has to ‘show' such an entitlement with its
facts.” Fowler v. UPMC Shadyside, 578 F.3d
203, 211 (3d Cir. 2009).
Rule 12(b)(6) only requires a “short and plain
statement of the claim showing that the pleader is entitled
to relief” in order to “give the defendant fair
notice of what the . . .claim is and the grounds upon which
it rests.” Twombly, 550 U.S. at 555. The
complaint must include “enough factual matter (taken as
true) to suggest the required element. This does not impose a
probability requirement at the pleading stage, but instead
simply calls for enough facts to raise a reasonable
expectation that discovery will reveal evidence of the
necessary element.” Phillips, 515 F.3d at 234
(citation and quotations omitted); Covington v. Int'l
Ass'n of Approved Basketball Officials, 710 F.3d
114, 118 (3d Cir. 2013) (“[A] claimant does not have to
set out in detail the facts upon which ...